The Making of an Innovation Environment: Five Keys to Profitable Technology Development

By Rosemarie Szostak, Ph.D., Nerac Analyst

Originally Published August 26, 2014

Innovation is Not a Buzzword

Innovation is not a buzzword – it is critical to any company that wants to compete in today’s marketplace. If you really want to innovate you need to understand what it takes, on the management level, the team level, and the information level.

The Five Keys:

1. The manager as guardian angel.

No one person or team of people can be effective innovators in a hostile environment. Fear is the biggest killer of disruptive ideas from the personal level to the company level. No one thrives if they think their boss or team members will deride them for visionary ideas. A boss who holds it against the team at a performance review when they cannot point to multiple successes within a single review period can kill innovation. The manager needs to run interference between the staff or team and upper management. If my manager doesn’t ‘have my back’ I cannot innovate. If managers are only looking to check a box come performance review it is easy for the employees and team to become risk adverse.

Risk-aversion is the biggest killer of innovation and once ingrained in an organization’s culture, it is hard to root out. Risk-aversion leads to product tweaking, something easily done multiple times within a performance period. Though productive, it is not strategically innovative. For a team to be innovative and not just generating product iterations, it needs to feel comfortable that their ideas will be heard and that management is actively on their side.

2. Accepting failure.

Innovation is about failing. This is the most difficult lesson for the young high-drive overachievers to learn. Learning what approach doesn’t work can be as valuable as finding one that does. Sometimes in failure a new idea is born, sometimes the failure is a dead end. If the company environment leaves no room for failure, or the individual team members are unwilling to pivot away from a dud project, innovation cannot happen.

Companies that don’t accept failure end up spending valuable R&D money to keep a doomed idea going because the team just won’t let go and admit their cool idea crashed and burned. Conversely, if failure is not embraced by the management, teams will be reluctant to take a risk the next time. Though they may not admit it to the outside world, the most innovative companies have huge piles of failed projects stashed in their basements and attics and oh, yeah, today stored on the cloud.

3. The art of applying metrics.

A maverick environment where crazy ideas abound can sound exhilarating and attracts brainiacs to the project like bugs to a porch light, but the reality of innovation is to take an inventive idea and make it real. Probably the biggest challenge in innovation is for the team to be given enough time to thoughtfully develop the metrics for a project. Without the right metrics it is not possible to determine when the project is done or when it is time to just quit. It is surprising how many teams launch great ideas without any metrics to judge their progress towards their goal. Better, cheaper, faster, smaller are standard metrics but not always the only ones. The innovating team must determine the critical metrics and in an innovative environment these metrics must be put on steroids. Improvements are measured by orders of magnitude rather than a few percent.

In the 1950s, a DARPA researcher wanted to make precision navigation a reality. Sputnik was in space and the US was preparing for the space race. The innovation—a combination of satellite, ground control and receiver. The metric—x really does mark the spot… exactly. A 50 pound receiver based on the prior innovation made it difficult to carry on the battlefield but was a huge improvement over the 17^th century sextant and watch. In the 1980s another DARPA researcher proposed to make the DoD’s GPS receiver smaller and lighter in weight. The DARPA boss asked the researcher how small he envisioned to make the GPS unit. The researcher picked up a pack of cigarettes and said “This small.” Precise navigation and as small as a cigarette pack were the two critical metrics identified that must be met to be successful to a) develop GPS and b) make it portable.

4. And then… a miracle happens.

Determining the critical metric(s) can be difficult, sometimes very difficult. But once those metrics are identified, the next step is to determine whether you can get there from here. Does the path by which your team has chosen to reach the metrics have one or more ‘and-then-a-miracle-must-happen steps’? Do other technologies have to be developed first to overcome the miracle-must-happen steps? In the two GPS examples above, there were two steps that required a ‘miracle’. In the original invention, a precise atomic clock needed to be developed in order to achieve the desired location precision. In the subsequent need to small-size the GPS, the stumbling block was the bulky analog processor technology. By developing a digital processor, the size barrier was broken that led the way to today’s GPS receivers.

Miracles don’t happen, they are developed. But it is up to the innovation team to identify and propose how to overcome these barriers. Whether a project should be started that requires a number of miracle steps, is a company decision. Those miracle steps can be costly to overcome. In the case of the GPS, DARPA developed a ‘work-around’ that was successful but was shortly abandoned when digital technology developed for other applications became the norm.

5. Choose wisely.

An insular company is hobbled from competing in the innovation space. Information is critical. Successful innovation teams look beyond the corporate walls for information while they are developing their ideas. This analyst is surprised how much these teams miss when doing a basic Google search. Part of it is due to limited keywords, finding 1.9M hits, not ‘choosing wisely’ in their search terms and not having a clear idea as to whether the hits are high value (peer review, patents, blogs, newspaper articles, Wikipedia, spurious websites, opinions). This is where Nerac can help. We understand the critical questions, the literature and where to find the best answers because we have been doing this for 50 years.

Some Key Questions for Innovation Teams:

• Who represents the target market?
• Would the team’s idea open up an opportunity but maybe in an adjacent market?
• Is the size of the market worth the R&D investment?
• Is the proposed innovation truly new?
• Who are or would be the competition if this idea is successful?
• How strong are the competing technologies?
• Would the innovation be a disruptive technology that would torpedo the competition?
• Is there a disruptive technology on the horizon that would torpedo your team’s idea?
• Has someone already tied up the intellectual property in this area?
• Are the components of the technology the team wants to develop available or will they need to be developed in-house?
• Are there partnerships (academic, consultant, start-up, other company) that could be leveraged to improve innovation success?

How Nerac Can Help

The internet (thank you DARPA) with its world wide web (thank you CERN) has been one of the greatest innovations of the 20^th century providing a tsunami of information at everyone’s fingertips. The challenge however is how and where to find the right information and turn it into knowledge critical to the innovation teams needs. Looking for and finding the right information, for many, is like looking for one new species of plankton in that tsunami. This can be overwhelming without the right tools and expertise.

As a research partner the analysts at Nerac are highly skilled with the right tools that can help the innovators and innovation teams, at the front end, develop the vital information and knowledge base necessary to choose wisely and improve the potential for successful innovation. Nerac can also help as the project is defined to help overcome the ‘miracle steps’ by identifying adjacent technologies that could be applied instead of reinvented and questions from members of the stage-gate process. And when the project is ready to become a product Nerac can help firm the IP basis.

Companies can become innovation machines. It requires the will at all levels to make it happen and to foster an optimal environment with the right resources that allows innovation teams to thrive. We, at Nerac, are here to help facilitate that process.